Overseas investment for build-to-rent homes being mulled

The government is looking into allowing more overseas investment for build-to-rent housing, a leaked draft Cabinet paper shows.

The coalition has already said it will take policy decisions to amend the Overseas Investment Act in its first 100 days, to make it easier to develop build-to-rent housing developments in New Zealand.

But the leaked document shows the Associate Finance Minister Chris Bishop wants to go further than this.

Bishop's preferred option is to allow foreign buyers to invest in any residential land to build new houses or accommodation facilities, even a single additional dwelling, as long as the buyer did not intend to live in them.

Due to the existing foreign buyers ban, overseas investment in housing or residential land is prohibited unless that investor is eligible to live in New Zealand.

Bishop also wants to issue a ministerial directive to send a strong signal New Zealand is open for overseas investment to boost its housing supply.

"Build to rent could play a part in helping to solve New Zealand's housing crisis. We have committed as part of our First 100 Days plan to make it easier for build to rent housing to be developed in New Zealand by amending the Overseas Investment Act," Bishop said in a statement.

"We're looking at a range of options to meet this commitment. The foreign buyers ban will remain unchanged."

Labour's housing spokesperson Kieran McAnulty said the proposal went far beyond what National campaigned on.

"To allow overseas investors to bypass consent rules that other New Zealanders and investors have to comply with, and bring it down to the level of a single dwelling is extraordinary," he said.

The paper said the proposal would contribute to improving housing supply, and encourage positive competition in the rental market.

But Bishop acknowledged if the option went ahead, the government could no longer decline an investment it it was deemed contrary to the national interest.

And once the exemption was made, a future government would not be able to reinstate any restrictions, due to New Zealand's international obligations.

National was warned about this when it campaigned on the foreign buyers tax during the election. It later had to ditch the proposal as part of its coalition agreement with New Zealand First.

"The very thing we warned the National Party about during the campaign, and they vehemently denied, just goes to show that they aren't being upfront with New Zealand," McAnulty said.

As this is a draft paper, it means it has not gone to Cabinet yet.

"I'll be making further announcements in due course once Cabinet has considered the options available to deliver more build to rent housing in New Zealand," Bishop said.

The leak is the latest in a series since the new government took office, including advice on fair pay agreements, and a draft memo on the Treaty Principles bill.